Body Corporate: Non-Paying Unit Owners and Stale Levies

When body corporate levies are unpaid by unit owners, by following a few simple procedures, body corporates can maximise the recovery the levies owed, as well as get back the recovery costs and up to 10% interest per annum on the outstanding amount.

The Unit Titles Act 2010 allows a body corporate to claim against an owner of a unit in that body corporate the ‘reasonable costs’ incurred in recovering an owing levy or expense. For example, if a body corporate levies an owner for the costs in repairing or maintaining a unit, that levy and any reasonable costs that may be charged by a lawyer or debt recovery agency in recovering that levy can be recovered.

Interest on an outstanding levy or expense can also be recovered. The Act specifies that interest on that outstanding debt cannot exceed more than 10% per annum. However, for the body corporate to successfully claim more than the standard interest rate (usually around 5%) the body corporate will need to have included the rate of 10% interest on outstanding debt in its rules, or have previously made a decision to charge the higher rate by resolution.

To avoid difficulties and maximise the recovery Body corporates should;

– Not let debts build up; and

– Act quickly to recover debt by owners;

– Ensure that the body corporate has resolved (or that the body corporate rules allow) that interest on any outstanding debt is set at 10% per annum.